Overview of goods purchase and sale contracts

Activities of purchasing and selling goods have a long history and play an increasingly important role in today’s life. When participating in these activities, the rights and obligations of parties are often governed by contracts. Therefore, parties involved in a purchasing and selling relationship need to be aware of the legal regulations on this matter. Below, NPLaw will provide information related to the legal regulations on goods purchase and sale contracts.

I. What is a goods purchase and sale contract?

Pursuant to Article 385 of the Civil Code 2015, a contract is an agreement between the parties on the establishment, modification or termination of rights and obligations. The contract reflects the voluntariness and freedom of the parties’ will. The Commercial Law 2005 does not regulate the concept of contract but only refers to what the purchasing and selling of goods is. Based on Clause 8, Article 3 of the Commercial Law, the purchasing and selling of goods is a commercial activity, in which the seller has the obligation to deliver goods and transfer ownership rights of goods to the buyer (purchaser) and receive payment, the buyer is obliged to fulfill payment, receive the goods and have ownership rights in accordance with the agreement.

From the above provisions, we can understand that a goods purchase and sale contract is an agreement between the seller and the buyer on the establishment, modification or termination of the rights and obligations of the parties in the activity of purchasing and selling goods.

II. Characteristics of the goods purchase and sale contract

The goods purchase and sale contract has the following basic characteristics:

Firstly, regarding the parties, those involved in this relationship are often merchants, organizations or other individuals engaged in commercial activities. Their activities aim to generate profits. However, non-profit entities can also enter into contractual relationships if they choose to apply the Commercial Law 2005.

Secondly, the subject of the goods purchase and sale contract is goods as defined in Clause 2, Article 3 of the Commercial Law 2005, including all types of movable property, even movable properties formed in the future, and things attached to land. Thus, goods are tangible and physical objects. Consequently, land use rights, intellectual properties or service products are not the subjects of this contract.

Thirdly, in terms of form, this contract can be expressed orally, in writing or established by specific actions. However, the Commercial Law 2005 stipulates that international purchase and sale contracts must be made in writing or other forms with equivalent legal validity.

Fourthly, the purpose of at least one party in this relationship is to make a profit. Here, we need to distinguish between “generating profit” and “making a profit”. “Generating profit” simply means aiming to create profits. Meanwhile, “making a profit” is more comprehensive and broader as it includes not only profits but also economic benefits and social benefits.

Fifthly, the goods purchase and sale contract has a bilateral nature, meaning that the right of one party is the obligation of the other and vice versa. This is clearly stated in the concept of the purchasing and selling of goods under the Commercial Law 2005. Accordingly, the seller has the obligation to deliver the goods and transfer ownership of the goods to the buyer, while the buyer has the right to receive the goods and the ownership of the goods; the buyer has the obligation to pay the seller, while the seller has the right to receive payment.

In summary, the goods purchase and sale contract has the following basic characteristics: at least one party is a merchant; the subject of the contract is goods as defined by Commercial Law; the purpose of at least one party is to make a profit; the bilateral nature, and the form of the contract.

III. Distinguishing goods purchase and sale contracts from civil purchase and sale contracts

These two types of contracts both involve the activity of purchasing and selling, but they have different natures.

Criteria	Civil purchase and sale contract	Goods purchase and sale contract
Contracting parties	Individuals, organizations (with or without legal person status)	At least one party must be an individual or organization with a business registration (merchant)
Subject of the contract	Any assets as defined by the Civil Code 2015 can be the subjects of the contract, including land use rights.	Goods including: - All types of movable property, even movable properties formed in the future; - Things attached to land.
Purpose	Usually for consumption purposes	Primarily for profits
Form of contract	Some contracts must be notarized or certified	Notarization or certification is not required
Governing Law	Civil Code	Civil Code Commercial Law
Authority of resolving Disputes	Courts	The parties can choose to resolve disputes through courts or arbitration

This article aims to provide readers with a general overview of goods purchase and sale contracts. Through this, readers can understand the concept, basic characteristics, and distinguish this contract from general civil purchase and sale contracts. Thus, readers will have a better understanding of this very common type of commercial contract. If you want to learn more about this issue to resolve your legal issues, please contact NPLaw for advice and support.